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IR35. Don’t take a “blanket approach”

The government reform of the off-payroll working rules (known as IR35) scheduled to come into force in April 2020 will apply to public & private sector organisations. Responsibility for operating the off-payroll working rules will move from individuals to the organisation, recruitment firms or other third party contracting with and paying the contractor (the “fee-payer”). Small organisations in the private sector are exempt – there is no small organisation exemption for the public sector.

The new increased compliance sets out information requirements and responsibilities in the supply chain whereby the client is required to provide a status determination statement so if your business hasn’t already started to prepare then you need to act now in relation to IR35, so that you are ready for the upcoming changes.

Client Obligations

End clients must:

Determine status of each assignment

Use reasonable care in making determination

Pass the determination statement to the party that it has entered into a contract with and the worker

Include the reasons for the determination

If a recruitment business doesn’t receive a determination it will not be liable

So why not place all your contractors inside IR35 to protect your liability?

As with the roll-out of the off-payroll working rules in the Public Sector back in 2017, we are hearing from some clients that are considering or have already made decisions to deem all roles as inside of IR35 – a “blanket approach” from April 2020.

This may seem an easy option but the off-payroll rules will introduce a statutory right for fee payers/workers to disagree with status determination statements. This will be a client-led status disagreement process for:

Client to consider evidence put forward by the fee-payer/worker

Client must review the determination in question

Client has 45 days to respond with the outcome, including the reasoning for their decision

The adoption of a “blanket approach” can lead to:

Reputational damage

Reluctance from flexible workforce to engage with your organisation

Loss of trust

Competitive disadvantage

Contractors are far more likely to work with clients that make case-by-case IR35 determinations. There’s still time to take affirmative action and ensure that you are in the best possible position come April 2020, we can work with you to manage the implementation of the off-payroll reforms as part of our TLC offering here at Church International so that you can continue to attract the best off-payroll talent.

In the meantime, if you are a client looking at the implication of IR35 on your organisation and the impact on your contingent workforce, or a contractor who wants to gain more insight into the implications of IR35 on your continued contract career, please register your interest in receiving our IR35 updates or taking part in our regular briefings by calling me on 01622 620718, emailing me at lesley@church-int.com or messaging me via LinkedIn